Any Recourse When Job Offer Is Rescinded? It Depends

Q. I recently applied for a position and ultimately received an offer in writing. The offer was contingent on a background check. After the background check, the company’s director of administration said he had not been able to verify my college degree but was removing the contingency and looked forward to seeing me “beginning April 21.”

The next thing I knew they called to say that they hadn’t been able to verify my degree and were rescinding my job offer. By that time, I had turned down two other opportunities and went on a shopping spree because I thought I had a good job waiting for me.

Isn’t there some kind of law about breach of contract to prevent this from happening?

--L.H., Huntington Beach

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A. It is difficult, based upon the information you provide, to determine whether you would have a valid legal claim. Generally, it is possible to pursue a breach-of-contract claim where a job offer is extended and later withdrawn, particularly where the individual has quit his or her job in reliance upon the offer.

There may be some hurdles in your way, however.

First, you do not say whether you actually have a college degree and whether you completed and signed a written employment application when applying for the job.

Many applications contain language by which the applicant agrees that if any information provided on the application or during the interview process is untrue, the offer of employment will be withdrawn or the employee will be terminated. If you signed such a document and you do not actually have a college degree, you would have little recourse.

Second, you do not say whether the company’s removal of the contingency was also in writing. If it was not, you may have difficulty proving that the contingency was actually removed, and it may also be difficult to prove that you justifiably relied upon an oral promise that contradicted a written agreement on the subject.

Third, even if the removal of the contingency was in writing, if the written job offer specified that you would be employed at will (that is, either you or the employer could terminate the employment relationship at any time for any reason), it might be difficult for you to win a breach-of-contract claim, because the employer would have been free to fire you at any time.

--James J. McDonald Jr.

Attorney, Fisher & Phillips

Labor law instructor, UC Irvine

Switch in Holiday Policy

Q. My company changed the holiday schedule two months after announcing it. In November the company gave us the 1997 dates, with seven specific days and two floating days to take when we want. Then in mid-February we were told we’d have to use one floater for the day after Christmas so the company could close for a four-day weekend.

Now I’ve lost a day to use for my own personal or religious reasons. And employees who have already used the floating days off have to borrow against 1998.

Our handbook says the company can change policies if it wishes, but isn’t the company obligated to follow through on a policy once it has been announced for the year?

--L.M., Los Angeles

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A. While an employer cannot require an employee to forfeit vested vacation days, it can exercise control over when vacation may be taken. Thus, under the law, your employer could give its employees floating holidays, then require the employees to take those holidays at specified times.

Your employer seems to have promised its employees that they could use “floating holidays” whenever they wanted. The issue you raise is whether that is a legally enforceable promise.

It probably is not. First, as you note, your employer reserved the right to change its policies. Second, it is reasonable to assume that your employer at least implied that it reserved the right to exercise some control over when floating holidays are taken.

If an employee decided to take a floating holiday on the busiest working day of the year, for example, the employer could exercise its discretion to deny the floating holiday. Similarly, your employer apparently decided that, for business reasons, employees must take a floating holiday on the day after Christmas.

--Josephine Staton Tucker

Employment law attorney

Morrison & Foerster

How to Leave 401(k) Untouched

Q. Recently my wife retired, and we have a couple of questions about her 401(k) disbursement. Most of it is in stock, which we expect to grow. We would like to leave the 401(k) with her former company for a while and fill out the paperwork to transfer it into a mutual fund at some future point. Is that feasible?

Also, when the 401(k) stock is sold and disbursed to her, is the stock price determined as of the day she requests it or the day it is actually disbursed?

--D.L., Fountain Valley

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A. If the vested portion of her benefit under the 401(k) plan exceeds $3,500, your wife has the right to leave the funds in that plan until she reaches the plan’s retirement age, which is generally 65.

However, if she chooses not to receive the amounts following termination of employment, her ability to withdraw those amounts before retirement age will be determined by the terms of the plan. In other words, the plan may provide that if she doesn’t take the distribution when it first becomes available, she may not be able to get the funds until she reaches retirement age.

Regarding the stock price, the actual date that the stock is sold is determined by the terms of the plan. The stock would have to be sold before the date of the disbursement, however, to enable the paperwork to be processed.

--Kirk F. Maldonado

Employee benefits attorney

Riordan & McKinzie